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Corruption Watch: July 3, 2003


3 July 2003, Volume 3, Number 23
TERRORISM
AL-QAEDA IN THE NEWS
A number of recent reports in the world press appear to reflect a growing resurgence of Al-Qaeda. "The Sunday Telegraph" on 22 June quoted Lebanese intelligence sources as saying that a Palestinian refugee camp near the southern port of Sidon has been infiltrated by members of Al-Qaeda who are believed to be behind a recent rocket attack on Beirut. The attack on a television station was blamed on a fundamentalist group, Asbat al-Ansar (League of Warriors), which is now allegedly in the hands of former Al-Qaeda fighters from Afghanistan who arrived in Lebanon in 2002.

A videotape of a masked speaker, reportedly obtained by AP from a senior intelligence official in Gulbuddin Hekmatyar's Hezb-e-Islami organization, warns of new terrorist attacks by Al-Qaeda and claims that Osama bin Laden is still alive. If authentic, according to "The Boston Globe" of 22 June, the videotape suggests that Al-Qaeda has formed a loose alliance with remnants of the Taliban and Hekmatyar's followers in Afghanistan.

The speaker on the tape, who identifies himself as Abu Haris Abdul Hakim, claims to be speaking in the name of all three groups. Speaking in Arabic, he reportedly says Al-Qaeda was responsible for the terrorist attacks in Saudi Arabia and Morocco that killed 69 people and 12 suicide bombers in May. According to "The Boston Globe" Hakim says: "Oh, our brothers in Palestine, Chechnya, Kashmir and Iraq: We will have good news for you very soon. And it will be about our supremacy over the Americans. This will be in the shape of martyrdom [suicide] attacks against Americans in the current month."

U.S. Attorney General John Ashcroft announced on 19 June that Iyman Faris, a Pakistani-born U.S. citizen from Columbus, Ohio, pleaded guilty in a Virginia court to conspiring with Al-Qaeda and providing it with material support. According to the 20 June edition of the "Financial Times," Ashcroft said Faris was involved in a plot to sabotage railroad tracks and sever the suspension cables on the Brooklyn Bridge in New York.

The "Financial Times" reported: "The plots were being devised in 2001, 2002 and into this year, a reminder that al-Qaeda has been active in the U.S. even after the Bush administration implemented wide-ranging counterterrorism measures and overthrew the Taliban regime in Afghanistan."

Faris is to be sentenced in early August, and faces up to 20 years in prison. RK

GEORGIA
ALLEGED GEORGIAN CRIMINAL KINGPIN ARRESTED IN MOSCOW.
Moscow police arrested Georgian national Shota Chichiashvili on 24 June, Caucasus Press and Russian media reported. Chichiashvili was sought by Georgian authorities in connection with the kidnappings of two Spanish businessmen in 2000 and of Georgian parliamentarian Petre Tsiskarishvili and British consultant Peter Shaw in 2001. He is also said to have been behind the May 2001 mutiny by members of the Georgian National Guard. Georgian Prosecutor-General Nugzar Gabrichidze said on 25 June that Chichiashvili will be extradited to Georgia "soon." Liz Fuller

RUSSIA
SUSPECTS IN YUSHENKOV KILLING ARRESTED...
The Russian police detained two people on 25 April on charges of having shot and killed Duma member Sergei Yushenkov on 17 April outside his Moscow apartment building. According a 26 June report on gazeta.ru, one of the detained men has confessed to the killing. According to "The Moscow Times" of 26 June, Interior Minister Boris Gryzlov said the two men had been detained in Syktykar and he gave their last names as Kulachinskii and Kiselyov. Soon after the slaying, police detained one suspect, 20-year-old Artyom Stefanov, who investigators claimed could have murdered the deputy for personal reasons. However, the young man's alibi was in order and he was released. RK

...WHILE SENIOR POLITICIAN IS ACCUSED OF ORDERING THE KILLING.
Mikhail Kodanev, a co-chairman of the Liberal Russia faction that continues to work with self-exiled tycoon Boris Berezovskii, was arrested in the early hours of 26 June and charged with ordering Yushenkov's killing (see "RFE/RL Newsline," 18 April 2003), newsru.com reported. Yushenkov was also a co-chairman of the Liberal Russia party. According to the website, Kodanev and his bodyguard were arrested at a hotel in Kydymkar in the Komi-Permyak Autonomous Okrug. Berezovskii's supporters held a special congress in Moscow on 14 June, during which Berezovskii was elected the party's leader and Kodanev was elected its sole co-chairman, "Nezavisimaya gazeta" reported on 16 June. Liberal Russia co-Chairman Viktor Pokhmelkin dismissed the pro-Berezovskii elements that organized the special congress as "a group of impostors who have no relation to Liberal Russia." RK

After the arrest was made public by Interior Minister Gryzlov, "Izvestiya" on 27 June quoted one of the leaders of Liberal Russia, Viktor Pokhmelkin, who told the newspaper that Kodanev was the person most likely to become the recipient of money that Berezovskii had allocated for the coming election campaign. "Izvestiya" also noted that throughout the investigation of the Yushenkov murder, police were extremely open with the media, showing reporters documents and discussing different aspects of the case. This, "Izvestiya" commented, is not a common occurrence.

The "Los Angeles Times" on 27 June noted: "The developments sharpen a long-running conflict between [Berezovskii] and the Kremlin, with [Berezovskii] calling himself the real target of Kodanev's detention. He also reiterated a charge that people associated with Russian President Vladimir Putin were probably responsible for Yushenkov's killing." JB/RK

RUSSIAN POLICE RELEASE MAJORITY OF LIBERATION PARTY SUSPECTS.
The Russian human rights group Memorial claimed that most of the 55 suspected members of the Islamic Liberation Party Hizb-ut-Tahrir who were arrested during a highly publicized roundup in a bakery in Moscow on 7 June (see "RFE/RL Organized Crime and Terrorism Watch," 19 June 2003) have been released, citing a report in "The Russia Journal" of 24 June (http://www.russiajournal.com/news/cnews-article.shtml?nd=38932).

The Russian Federal Security Service (FSB) announced on 10 June that its agents, in close cooperation with police, had arrested 55 members of the group, which has been labeled by some states as a terrorist organization. "The Russia Journal" reported: "'In reality, police rounded up workers at the bakery, wrote down their names and passport numbers, and then let most of them go,' said Vitaly Ponomaryov, head of Memorial's Central Asia. program." About eight people were taken to a police station, and all but two were released within days, he said, citing conversations with those who were freed. RK

UKRAINE
TYMOSHENKO ASSOCIATES CHARGED WITH STEALING $2 BILLION.
Ukrainian Prosecutor-General Svyatoslav Piskun charged two former business associates of prominent opposition politician Yuliya Tymoshenko with illegally acquiring more than $2 billion through shady natural-gas deals and financial schemes, "The Moscow Times" reported on 25 June. After a month-long investigation, prosecutors filed charges on 23 June claiming that Tymoshenko's former colleagues from the now-defunct Ukrainian EES -- Ukraine's predominant gas dealer in the 1990s -- illegally acquired $2.25 billion through sales of Russian natural gas.

The two are also accused of hiding hard-currency revenues, stealing state assets, and tax evasion that allegedly cost the state another $216 million, according to the paper. The defendants, Tymoshenko's father-in-law Hennadiy Tymoshenko -- former Ukrainian EES president -- and former accountant Antonya Boliura were extradited from Turkey and detained in Ukraine in 2002. Yuliya Tymoshenko and her husband Oleksandr have been acquitted of similar charges, but prosecutors reopened an investigation into their alleged wrongdoing earlier this month. Tymoshenko headed Ukrainian EES before becoming deputy prime minister in 1999. Last month, a Kyiv appellate court ruled that prosecutors had opened a previous case illegally and ordered the defendants to be released. However, the Ukrainian Supreme Court put the decision on hold after prosecutors accused the judges of falsifying their decision. RK

END NOTE
THE SAGA OF PAVLO LAZARENKO

By Roman Kupchinsky

On Friday, 13 June, Pavlo Lazarenko, the former prime minister of Ukraine detained in New York in February 1999 and eventually arrested and charged with money laundering and mail fraud, was released from detention by Judge Martin Jenkins in San Francisco in order to be allowed to listen to testimony given to federal investigators in Kyiv, Ukraine. He will remain outside the California federal detention center until his trial in August. According to the "Reporter" of 19 June, Lazarenko posted bond of $86 million. The money, however, is tied up in litigation in Antigua, where that government has also accused Lazarenko of money laundering.

When his request for release was granted, his team of U.S. defense lawyers -- led by Harold Rosenthal -- along with the chief of the Organized Crime Strike Force in the U.S. Attorney's office in San Francisco, Martha Borsch, and her investigators went to Ukraine, Cyprus, Israel, Antigua, Switzerland, the Netherlands, and England in an attempt to question a number of witnesses in the case. The list of those they intended to question included Ukrainian President Leonid Kuchma; the man who appointed Lazarenko prime minister.

The Lazarenko trial promises to be a revealing one, and the prospect has placed many present and former high-level Ukrainian officials in a state of heightened alert. The Ukrainian media, repeatedly cited by the Council of Europe and human rights groups as lacking in essential freedoms, has largely ignored the request by U.S. investigators to have the president -- along with national security adviser Yevhen Marchuk, the former head of the Ukrainian gas monopoly Naftohaz Ukrayiny, Ihor Bakay, and former Prime Minister Valeriy Pustovoytenko -- questioned. The Ukrainian media did, however, report that the Americans wanted to question opposition leader Yuliya Tymoshenko. Tymoshenko, an outspoken critic of Kuchma, was recently cleared of corruption charges by a Kyiv appellate court. Subsequently, after a brief hearing, the Ukrainian Supreme Court, stacked with presidential appointees earlier this year, threw out the decision of the appellate court and reinstated the charges of corruption and bribery against her.

The Lazarenko saga is long and arduous. (For a detailed description of the case, see the four-part series beginning on 6 December 2001 in "RFE/RL Organized Crime and Corruption Watch.") After his arrest in Switzerland in 1998, Lazarenko jumped bail of $3 million and returned to Kyiv, where he continued his political activities and announced that he would be running for president. In February 1999, just prior to a meeting of the parliament that was to vote on removing his immunity from prosecution, he left Ukraine for Greece. At this point, the Ukrainian parliament lifted his parliamentary immunity and he flew to the United States, where he was picked up at New York's JFK Airport on charges of trying to enter the United States on an invalid travel document. He unsuccessfully applied for political asylum at that point.

When word got out that Lazarenko had been arrested in the United States, Ukrainian authorities repeatedly demanded that the United States return him to Ukraine to stand trial. Since there is no extradition treaty between the two countries, this demand was not honored. Many analysts at the time felt that Lazarenko could not receive a fair trial in Ukraine, that the chances of him dying in detention were higher than average, and that the Ukrainian insistence that Lazarenko be sent home was rather a way of silencing him than of seeing justice done.

Lazarenko's arrest in the United States was a disastrous event for some officials in Kyiv. Their colleague, a high-level Kyiv insider, was now inside a jail cell in San Francisco; and if he decided to share his knowledge with U.S. investigators, it might have unpredictable consequences. This event was compounded in November 2000 when it was revealed that a member of Kuchma's security detail, Mykola Melnychenko, had been covertly recording conversations in the president's office since late 1998. The recordings, the gist of many of which suggested illegal activities, were in themselves a serious indicator of high-level corruption in Kyiv. The conversations appeared to reveal President Kuchma insisting on the silencing of a vocal journalist, Heorhiy Gongadze, who was soon afterwards found beheaded outside of Kyiv. They also included a conversation in which the president demonstrated an intent to sell an advanced radar system, the Kolchuga, to Iraq. And while the Kolchuga has not been found in Iraq, the conversation ultimately discredited the president of Ukraine internationally.

And while President Kuchma maintained his innocence, the Melnychenko recordings were authenticated by the FBI and by a private audio laboratory in the United States and shown to be genuine. A government laboratory in Kyiv, which did not have a copy of the original recording device or chip onto which the conversations were digitally recorded, nevertheless announced that they were fakes.

The recordings were not only damaging, their release coincided with the interrogations taking place in San Francisco, where a member of Kuchma's inner circle was now being held.

More to the point was the nature of Lazarenko's alleged crimes: According to the indictment in California, he made most of his illegal profits in the energy business. The Melnychenko recordings also appeared to suggest that most of the money in various presidential slush funds was coming from the energy barons, particularly from the state gas monopoly, Naftohaz Ukrayiny, run by Bakay. Recent revelations suggest that this system has not ended, and that Ukrainian and Russian leaders are still using the criminalized energy business in order to enrich themselves.

As the U.S. investigation of Lazarenko continued, the Ukrainian Prosecutor-General's Office announced in February 2002 that it was charging him with ordering the killings of two Ukrainian officials, Vadym Hetman, the former head of the central bank, and Yevhen Shcherban, a member of parliament. According to prosecutors, Lazarenko had paid a criminal gang close to $1 million to kill the two men. But, unfortunately, the men who were alleged to have done the actual killings themselves had since died, and so the only person left in the prosecution's case was the driver of one of the deceased suspects. He was tried and sentenced in June 2003.

Shortly after Lazarenko's arrest, on 19 June 1999, a man who worked for Lazarenko for many years in Dnipropetrovsk when Lazarenko was the provincial governor and later was an adviser when his boss became prime minister, Petro Kirichenko, was also arrested in California. Kirichenko was widely suspected of being the "bag man" for Lazarenko. It was allegedly Kirichenko who set up the different offshore shell companies and numerous coded bank accounts for him. According to informed sources, Kirichenko knew everything that was taking place in the conspiracy.

Kirichenko, like his employer, was a high roller and had purchased an exclusive ocean-side home close to Lazarenko's in Marin County, California for $10 million (cash). Lazarenko himself owned comedian Eddie Murphy's former mansion, which he bought for $6.75 million. After a few months in prison, Kirichenko decided to cooperate with the prosecution and was released. And while the nature and extent of Kirichenko's cooperation has not been made public, many suspect that it is damaging to many high-level officials in Kyiv, including the president.

It remains to be seen whether President Kuchma and others will allow Lazarenko's lawyers or investigators from the U.S. Attorney's office to interrogate them. One, former Prime Minister Pustovojtenko, who at the time of Lazarenko's tenure as prime minister was in the cabinet and allegedly knew all the details of what went on, has already stated that he will not talk to the visitors from the United States. The president's office had not made a decision on whether the president would answer any questions by the time this article went to print. Altogether, there are some 50 witnesses on the list of those to be questioned.

One of the issues to be resolved by the investigation is whether Lazarenko acted alone in all instances or conducted any of his activities at the behest of others.

The trial of Pavlo Lazarenko is scheduled to begin on 18 August. Barring any further delays, testimony will begin on that day which might shed a great deal of light on illegal activities in Kyiv and the role, if any, played by Ukraine's political elite in those transactions.

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